COVID-19 pandemic: Are the government business support measures in Kazakhstan effective?

KPMG published the survey devoted to the analysis of the effectiveness of state support for business in Kazakhstan during the COVID-19 pandemic.

We surveyed more than 60 directors of SME and big business, a number of banks, development institutions, and business associations in Kazakhstan.

The main goal of our analysis was to try to understand whether the measures of state support related to COVID-19 were sufficient, how effective they were (from a business standpoint), and whether business had any constructive proposals to improve this system?
The state of emergency and COVID-19 quarantine measures have had a negative effect on Kazakhstan business:

• About 300 thousand entities have suspended operations
• 1 million business entities have suffered directly from the pandemic, mainly in the services and trade sectors
• More than 1.6 million people were sent on leave without pay
• About 14-15 thousand SME with bank loans have requested a deferral
• 4.5 million people have received a social benefit of KZT 42,500

The business found itself in a situation when it was impossible to plan its operational activities. In such case, support can only be targeted from the state. Overall, respondents rated the quality of state support for business as “below average”

Executive Summary

• The IMF forecast on the real reduction in GDP in 2020 was revised downward, from 2.5% to 2.7%.
• The drop in oil income and consolidation in the tax and budget sector has led to a worsening fiscal posi¬tion. Economic diversification (lower dependence on oil) is essential.
• Government spending in 2020 will be almost double budgetary revenues (not including transfers from the National Fund).
• Only 30% of small and medium enterprises affected by the coronavirus pandemic can obtain state support. For the remainder, assistance was not accessible.
• Among the measures announced by the government, there are none aimed at support¬ing big business, even though big business accounts for 80% of the country’s tax reve¬nues and more than 60% of its jobs.
• The majority of respondents consider the lack of a unified information portal for government support and a single operator for each program to be one of the key barriers to participating in government support programs.
• About 90% of respondents believe that it is essential to expand industry criteria and to re-engineer state support programs for business.
• The upcoming “second wave” of infections and the likely continuation of the already-announced second quarantine will have an adverse effect on Kazakhstan’s GDP, solvent demand, and how long it will take businesses to come out of the recession.
• Enhancing the performance of existing and newly announced government support measures would make it possible to improve the business situation even given the current level of fund¬ing (nonetheless, additional support will also be necessary).
• The government and business need a single platform for constructive and transparent dialogue: only direct discussion by experts, and prompt, sufficient support for business will help the country to recover from the crisis and lay the groundwork for sustainable long-term growth.
  

You can get more detailed information by contacting us:

Inna Alkhimova
Head of Tax & Legal
KPMG Caucasus and Central Asia
Т: +7 (727) 298 08 98
Е: ialkhimova@kpmg.kz

Dias Kalazhanov

Partner, Head of Deal Advisory
KPMG Caucasus and Central Asia
Т: +7 (727) 298 08 98
Е: dkalazhanov@kpmg.kz

For Media issues please contact press@kpmg.kz